Financial services firm Edward Jones launched its own professionally managed SMA today, focusing primarily on U.S.-based large cap stocks. The SMA will be available exclusively to clients enrolled in Edward Jones’ existing UMA program. It will offer between 40 and 60 large cap securities focusing primarily on U.S.-based companies with a capitalization above $10 billion.
The SMA will be benchmarked to the S&P 500. It will require a minimum investment of $50,000 and will be available free of charge. Instead, users will be subject to regular Edward Jones advisory fees, including a maximum of 135 basis points for the advisory services and 5 basis points for the platform usage.
The SMA marks a departure for the firm, which has, until now, offered SMAs from third-party managers. It currently offers 70 such SMAs to its clients.
“As an organization, we are really striving to be agnostic of how we deliver advice across our platforms,” said Russ Tipper, general partner, products with Edward Jones. “We really wanted to make sure that we could support choice in how clients could consume that advice from us and drive efficiency for the branches without compromising personalization, so we launched this SMA.”
A study by advisory firm Escalent last year found that financial advisors continued to favor SMAs because of low fees and broad investment options. Advisors in Escalent’s survey expected to increase their average SMA allocations by 800 basis points to 26% between year-end 2023 and 2025. Advisors to high-net-worth investors are expected to increase SMA allocations from 23% to 31%.
Concurrently with the launch of the proprietary SMA, Edward Jones announced that its financial advisors will start delivering financial planning services for a separate fee to clients with at least $250,000 in the firm’s advisory program accounts. The services will include estate planning, tax planning strategies and scenario modeling, among other things. Edward Jones advisors will receive compensation for these additional services. The program will be rolled out gradually, starting with approximately 600 advisors who will begin offering financial planning services to clients this October. Edward Jones pilot-tested a one-time financial planning service to clients through its headquarters in 2023.
According to Tipper, the new SMA and the financial planning rollout are part of Edward Jones’ efforts to broaden its offerings to attract more high-net-worth clients. Historically focused primarily on middle-class clients, the firm has previously discussed plans to launch a high-net-worth business in 2024, offering more sophisticated investment options, including tax and estate planning services. It was also looking to bring in more experienced independent advisors from outside the firm who might be nearing retirement and looking to transition their practice and pair them with Edward Jones’ younger advisors.